By Eloghene Adaka, Esq.
Nigeria, like any other country in the world has laws and guidelines that govern the registration and operation of businesses. The principal legislation for these, is the Company and Allied Matters Act, CAP C20 Laws of the Federation 2004 (or “CAMA”, as its popularly known).
In Nigeria the law or principal legislation that governs operations of businesses is the Companies and Allied Matters Act. In carrying out a business, the first thing to be considered is the business name. A business name is defined as the name and style under which a business is carried out, whether in a partnership or otherwise. Companies are not the only business organisations in Nigeria. There are others like sole proprietorships and partnerships, which are covered by business names under the CAMA. Business names are covered under part E of the NEWLY ENACTED CAMA. Section 811 provides for the establishment of the Office of the Registrar of Business Names in every State of the Federation. Section 815 of the CAMA makes it mandatory for every firm, individual or corporation required to be registered under Part E, to be registered within twenty-eight (28) days from the date of the commencement of the business for which registration is required. Therefore individuals, partnerships and companies can register business names.
Using a business name is the most convenient form of doing business by a sole proprietor or partnership. The main essence for registering a business name is to secure that name from being used by others who carry out similar businesses in order not to pass for the business of another.
The following types of business and business names to be registered include:
1. Sole proprietorship/trader
2. Partnership firms
Advantages of Registration of a Business Name
1. Simplicity of registration: in registering a business name, certain documents required in incorporation of a company (such as memorandum and articles of a company, particulars of directors and secretary, declaration as to compliance with CAMA etc.,) are not needed. This makes it easier to carry out such registration.
2. It is cheaper to register a business name as there is no need to pay stamp duties.
3. Easy management: it is easier to manage a business registered with a business name. For instance, a sole proprietor takes decisions on his own. It shows the true identity of those behind its formation. There is also less formality in administration of the business.
4. Protection of Corporate Name: The registered business name is protected from parallel registration either as a corporate name, business name, or trademark.
5. Easy Dissolution: there is no procedural requirement for dissolution of a business registered as a business name. Section819 only provides for notice to be given to the Registrar for removal of any firm, company, or individual registered under part B which has ceased to carry on business, or if the individual in a sole proprietorship is deceased. Section 819, CAMA.
6. Although the registration of a business name with another person is not proof of a partnership, it raises a rebuttable presumption of the existence of a partnership.
Hence, individuals, partnerships, firms and companies can register business names also. You can open a corporate account with your registered business certificate.
7. Creates Trust: Customers can view the business as being more reliable.
8. A registered business gives client’s confidence that they are dealing with a reputable organization.
9. A registered business gets easy access to loans and boundless opportunities.
10. You have better access to investors with a registered business as investors look at the business structure first before investing.
It is important to note that a business registered under part B (as a business name) of CAMA has no legal personality. It cannot sue and be sued in its name etc. Action can be brought against the person(s) using the business name. Example is Kuro Leizou (trading under the name and style Kuro Leizo`Ventures). Therefore, it only serves as a means to show the public the true identity of the owners.
Thus, under the following circumstances, registration of a business name is not compulsory. As provided for under Section 814 of the CAMA:
a. For an individual, if he uses his full name, initial and surname or the surname without any addition
b. A Firm or Partnership: if they use the full name, initial and surname of the partners without any addition
c. A Company or Corporation: when it uses its corporate name without any addition.
d. Partners having the same surname: if there is an addition of an “S” at the end of the surname.
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When is the Registration of a Business Name Compulsory?
The registration of a Business Name is compulsory under the following circumstances.
If the true surname of an individual is not used.
If a mix of the surname and forename of the partners is used.
If the addition of “& sons”, “& co”, “enterprises”, “Ventures”, etc is made.
BUSINESS NAMES WHICH ARE PROHIBITED AND RESTRICTED
Restrictions to names are provided for under the CAMA where the Registrar is of the opinion that the registration of any of the under listed names would likely mislead the public, then the Registrar shall, unless the consent of the CAC has been obtained, refuse to register the business name or cancel the registration thereof. Those names include:
a). Any name which contains the words NATIONAL,GOVERNMENT, MUNICIPAL, STATE, FEDERAL or any other word which suggests that the business enjoys the patronage of the Federal, State or Local Government.
b. Any name which contains the word “co-operative” or its equivalent in any language or any abbreviation thereof.
c). Any name which contains the words “chambers of commerce”, “building society”, “guarantee”, “trustee”, “investment”, “bank”, “insurance” or any word of similar connotation
d).Any name which is identical with or similar to any name by which a firm, company, or individual is registered in Nigeria under CAMA.
e) Any name which is similar to any trademark.
From the foregoing, the restricted names are:
1. Guarantee, Trustee, Investment, Bank, Insurance.
2. Identical names.
3. Similar trademarks.
The prohibited names are provided for under Section 30 (2)of the CAMA. By that provision, the Registrar of business names shall refuse to register, or cancel the registration of any business name which:
a) Contains any word which in the opinion of the Registrar is likely to mislead the public as to the nationality, race, or religion of the persons by whom the business is wholly or mainly owned or controlled;
b) Is in the Registrar’s opinion deceptive or objectionable in that it contains a reference, direct or otherwise, to any personage, practise or institution, or is otherwise unsuitable for use as a business name.
From the foregoing, the prohibited names are:
1. Misleading names.
2. Deceptive names in the opinion of the Registrar.
WHO CAN REGISTER a BUSINESS NAME (CAPACITY)?
Sole proprietors (individual – that is, every person), partnerships and companies can register business names. However, note the following:
a) INFANTS: an infant can register a business name. However, by section 816(6) CAMA, where an individual, who is a minor (below 18 years), or a firm of which one of the partners is a minor intends to register a business name, the signature of such a minor on the Statement in the prescribed form shall be COUNTERSIGNED by a Magistrate, Legal Practitioner or Police Officer of or above the rank of ASP. S
By Regulation 55 of the Companies Regulations 2012, where a Magistrate, Legal Practitioner or Police Officer of or above the rank of ASP counter-signs a minor’s signature, such person shall state his full name, address and phone number.
The registrar may however refuse to register a person or a partner in a firm who is below 18 years as contained on a Statement on a prescribed form.
b) FRAUDULENT PERSONS: these persons are absolutely barred or estopped from registering or joining to register a business name. In this regard, section 5)
CAMA provides that where the Register has irrefutable evidence to the effect that an individual, firm or company that has previously been involved in fraudulent trade malpractices, either in local or international trade, is submitting an application for the registration of a new business name, the Registrar shall refuse to register such a business.
Time For The Registration Of A Business Name
By virtue of Section 815, CAMA, for a business organisation to be registered as BUSINESS NAME, it can carry on business for twenty-eight days (28) before registering. CAMA makes it mandatory for every firm, individual or corporation required to be registered under Part B, to be registered within twenty-eight (28) days from the date of the commencement of the business for which registration is required.
The above provision differs greatly from provision of CAMA relating to incorporation of companies which is to the effect that a company can only commence business upon incorporation.
The conditions for registration of business names are:
1. The business organisation involved must be carrying on business in Nigeria under a business name.
2. Have a principal place of business in Nigeria.
Eloghene Adaka Esq is a weekly columnist on Legal Corner with NIGER DELTA TODAY (NDT). She can be reached at email@example.com for further clarification or questions on legal issues.